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"...You have no idea how much you have helped me, You have carved years off the development time in relation to my new concept. Thank You."
C. MacMillan, Perth, Australia
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Common Business Plan Mistakes
Often you may hear about what a business plan consists of. While including the necessary items is very important, you also want to make sure you don't commit any of the following common business plan mistakes:
Don't Delay Writing A Business Plan
Don't wait to write a plan until you absolutely have to. Too many businesses make business plans only when they have no choice in the matter. Unless the bank or the investors want a plan, there is no plan.
Don't wait to write your plan until you think you'll have enough time. "There's
not enough time for a plan", business people say. "I can't plan. I'm too busy
getting things done". The busier you are, the more you need to plan. If you are
always putting out fires, you should build firebreaks or a sprinkler system. You
can lose the whole forest for paying too much attention to the individual
burning trees.
Don't Underestimate The Importance Of Cash Flow
Cash flow is more important than sales, profits, or anything else in the business plan, but most people think in terms of profits instead of cash. When you and your friends imagine a new business, you think of what it would cost to make the product, what you could sell it for, and what the profits per unit might be. We are trained to think of business as sales minus costs and expenses, which equal profits. Unfortunately, we don't spend the profits in a business. We spend cash. So understanding cash flow is critical. If you have only one table in your business plan, make it the cash flow table.
Don't Overinflate Your Business Idea
Plans don't sell new business ideas to investors. People do. The plan, though necessary, is only a way to present information. Investors invest in people, not ideas.
Don't Fear Writing A Business Plan
Doing a business plan isn't as hard as you think. You don't have to write a doctoral thesis or a novel. There are good books to help, many advisors among the Small Business Development Centers (SBDCs), business schools, and there is software available to help you (such as Business Plan Pro, and others).
Vague Ideas Don't Help A Business Plan
Leave out the vague and the meaningless babble of business phrases (such as "being the best") because they are simply hype. Remember that the objective of a plan is its results, and for results, you need tracking and follow up. You need specific dates, management responsibilities, budgets, and milestones. Then you can follow up. No matter how well thought out or brilliantly presented, it means nothing unless it produces results.
One Size Doesn't Fit All
Tailor your business plan to its real business purpose. Business plans can be different things: they are often just sales documents to sell an idea for a new business. They can be detailed action plans, financial plans, marketing plans, and even personnel plans. They can be used to start a business, or just run a business better.
Don't Dilute Your Business Plan Priorities
Remember, strategy is focus. A priority list with 3-4 items is focus. A priority list with 20 items is something else, certainly not strategic, and rarely if ever effective. The more items on the list, the less the importance of each.
Be Conservative Estimating Your Business Plan Financial Projections
Have projections that are conservative so you can defend them. When in doubt, be less optimistic.
This Article Provided by Palo Alto Software, Inc.
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